Exclusive

 

*Why Nigeria may not exit recession in First quarter – Prof Ekpo

*Resources sunk into the power sector is alarming, disturbing and embarrassing.

*Those making billions of Naira through state capture.

*Why FG failed to achieve its objective for closing the border

*What will happen if FG borrows from dormant and unclaimed dividend account

*What is required to manage Nigerian economy well

 

AKPAN H. Ekpo, professor of Economics and Public Policy, University of Uyo, is also the chairman, Foundation for Economic Research and Training, FERT, Lagos, Nigeria. Ekpo was the director general of the West African Institute for Financial and Economic Management, WAIFEM, in Lagos, Nigeria, from May 2009 to December 2018. A former vice chancellor of the University of Uyo, Akwa Ibom State, he was also a former director at the Central Bank of Nigeria.

A graduate of the prestigious Howard University in Washington, DC, where he obtained Bachelor of Arts and Master of Arts degrees in Economics in 1976 and 1978, respectively, Ekpo also bagged a PhD in Economics from the University of Pitttsburgh, Pennsylvania in 1983.

He was at various points a lecturer at North Carolina Agricultural and Technical State University, Greensboro, North Carolina from 1981 to 1983; University of Calabar, Calabar, Nigeria from 1983 to 1989; where he quickly rose up the ranks to become a Senior Lecturer in 1987. From 1990 to 1992, Ekpo was a visiting professor, Department of Economics, University of Zimbabwe, Harare, Zimbabwe. From January to July 1992, he was an associate professor and head, Department of Economics, University of Abuja, Nigeria and became professor there in February 1992.

He became the dean of Faculty of Management Sciences of the university in July 1992. In September 1994, Ekpo returned to his home state of Akwa Ibom, where he became head, Department of Economics at the University of Uyo. In 1997, he became the dean, Faculty of Social Sciences. In 1999, he was appointed the deputy vice-chancellor of the University of Uyo.

He became the vice chancellor of the University of Uyo from May 2000 to May 24, 2005. In May 2009, he was appointed the director general of the West African Institute for Financial and Economic Management, WAIFEM, in Lagos, Nigeria.

Ekpo has over 170 publications, comprising refereed journal articles, books, chapters in books, conference proceedings and other research outlets. He has consulted (still consulting) for several national and international organizations such as the National Planning Commission, The World Bank, International Monetary Fund, IMF, Economic Commission for Africa, ECA, African Economic Research Consortium in Kenya, Global Network in India, Forum of Federations in Canada among others.

He has advised all levels of government (Municipal, State and Federal) in Nigeria. Between 1995 and 1999, he was chairman, Ministerial Advisory Committee, Federal Ministry of Finance, Abuja. He was Technical Adviser to the Vision 2010 Committee. He was Editor of the prestigious Nigerian Journal of Economics and Social Studies from 1997 to 2003. Ekpo was once the chairman of Akwa Ibom Investment and Industrial Promotion Council, AKIIPOC, Uyo, Akwa Ibom State. He has served in various government boards and boards of companies, notably the Utilities Commission in Abuja and the Central Bank of Nigeria, CBN, (2004–09). He was also a member of the Monetary Policy Committee of the CBN, (2004–09). In 2002, Ekpo was conferred with the National Productivity Order of Merit Award by the President of Nigeria.

Ekpo was a member of the National Economic Management team in Abuja, member of the Steering Committee of Vision 2020 and a former President of the Nigerian Economic Society. He belongs to several professional associations such as the Nigerian Economic Society, American Economic Association, Royal Economic Society in the United Kingdom, African Finance and Economic Association, International Institute for Public Finance, Nigerian Statistical Association, among others. He is member of the board of the African Institute for Applied Economics, and the Clement Isong Foundation in Nigeria. Ekpo is a Fellow of the Nigerian Economic Society.

Always a busy executive, but Prof. Ekpo made out time to grant an exclusive interview to Realnews via a questionnaire by Maureen Chigbo, editor. His responses are enthralling and provides an expansive view of what the government at both the federal and subnational level are doing to drive the economy and development that will better the lives of all Nigerians and enable them to ride out the hard times.   Excerpts.

Realnews: You went back to the Ivory Tower after your sojourn in the corporate world. Was it difficult for you to adjust? How has your experience in the corporate world affected your life in the university now?

Ekpo: Yes. I am back to the university after nine years and six months in the West African Institute for Financial and Economic Management (WAIFEM) as the Director General. I interacted with the corporate world though WAIFEM is not a private sector organization. It is a regional capacity training outfit owned by English speaking central banks of West Africa.

WAIFEM also conducts research on issues emanating from the capacity building and training programmes. I interacted more with the corporate world when I established the Business Development Unit of WAIFEM targeted at the private sector in Nigerian and other countries.

Sometimes I was involved in the delivery of some courses as well as being part and parcel of the research programmes. It was not difficult to adjust because from time to time particularly on weekends I was engaged with post-graduate students at the University of Uyo throughout my stay at WAIFEM. I was on leave of absence without pay from the University. If you can recollect, I was one time Vice-chancellor of the University of Uyo (federal) and throughout my tenure as VC, 2000-05, I lectured. Lecturing and research is in my DNA. There is no doubt that my experience in WAIFEM and involvement in Nigeria’s public policy space since the 1990s have enriched my lecture delivery and hopefully benefit my students.

Realnews: Will there ever be a time when the Academic Staff Union of Universities, ASUU, and other unions in the university system in Nigeria stop going on strike?

Ekpo: Strikes by ASUU will end when government begins to honour signed agreements meant to improve the quality of education. For the most part, the agreements are meant to provide adequate facilities for teaching and research to enable our universities meet global standards. No country develops faster than its manpower building institutions. You kill tertiary institutions; you kill the economy. Take for example, the recent strike which was unnecessary if government had honoured the agreement signed in 2009. But for ASUU, the University system would have collapsed. The present fragile survival of the system is due to ASUU.

Realnews: The low standard of education is a major concern to many people in the country. Is the perennial ASUU strike not a major factor in lowering the standard of education and quality of graduates in Nigeria?

Ekpo: The low standard of education is a major concern, but the strike by ASUU is not the factor. University education is a derived demand. It is crucial that the primary and secondary levels of education in the country be re-examined. In each year, the managers of the education system would lower the JAMB score – a requirement for entry in the university.

As Vice-chancellor, I introduced the post-Jamb examination in the country in 2004, trying to raise the standard requirements for entry into the University of Uyo. It became nationwide the following year. It has since been abolished for no good reason than to admit half-baked candidates into the university. In addition, must everyone obtain a university education. In most developed countries which we are trying to emulate, for example, the USA only about 30 percent of its population have university degrees. In fact, most post-graduate programmes are populated by foreign students. In my view, we are doing cut and join in the educational system. It is time to sit down and take a serious look at the education system at all levels and proffer lasting solutions.

Realnews: What can the university managers do to save the situation?

Ekpo: The university managers cannot do much, if my experience as VC of two universities (Federal and State) is anything to go by. The universities need adequate funding from various sources; the incentive structure must be right. For example, paying a university professor at his/her bar gross salary of N500,000.00 monthly with the prevailing unfavourable macroeconomic environment would not encourage any promising and/or brilliant young person to pursue an academic career.

As VC in Uniuyo, for four years, Council had to borrow to pay monthly salaries to staff. The university provides its own basic amenities like power supply via generators, security, water etc. Consequently, managers began to impose all kinds of frivolous fees on students to keep the system afloat. The autonomy issue is another problem. Yes, the university system has autonomy, but how is it implemented?

Realnews: Is there a link between poor quality education at both the primary and secondary school level to what happens in the university and what can be done to strengthen the system at various levels of education in the country?

Ekpo: There is a link. As I said earlier, the university system admits students from secondary schools. It is crucial to strengthen both the primary and secondary levels by providing adequate facilities for learning to both teachers and pupils. Teachers at the primary and secondary school levels are not well paid; the teachers, who are qualified are not re-trained continuously. The school environment is usually nothing to write home about in most parts of the country. There are still parts of Nigeria where children are taught under the tree. The dual school system has created problems for the system. Most of the privately owned primary and secondary schools are just avenues for making money by the proprietors. When I attended primary school in Lagos, there was only one private school called Corona. Most of us went to public and faith-based schools supported by government. Children of VIPs, including managers of schools were in the same class with those from humbled homes. They all interacted and it was good for the society – children from different classes learnt from each other. The same pattern in the secondary schools. But look at today. The inequality is so wide, the class differentiation is so pronounced and the society at large is paying the price of a segmented school system.

Realnews: How do you see the economy of Nigeria now? Is it possible the country will exit recession in the first quarter of 2021?

Ekpo: The economy has not performed well. Before the health pandemic and the sharp drop in oil revenues, the economy was in a stagflation phase as reflected by rising inflation. Rising rates of unemployment and underemployment and sluggish growth of about 2 percent. The misery index kept rising, about 88 percent. The country is now in a recession of a special type affecting both the demand and supply sides of the economy. The COVID-19 crisis and the uncertainty in the global oil market coupled with the consumption structure have worsened the situation. What is required is the aggressive implementation of the already grafted fiscal and investment/structural policies. I am referring to the 2021 budget and the Sustainability Plan. However, finding the needed resources would remain a challenge. The Central Bank can assist through its development functions, but once an economy is deep in a recession, monetary policy may not be too effective. It was, therefore, proper for the CBN to leave all relevant indicators unchanged during its last MPC meeting. It is not possible for the country to exit the recession in the 1st quarter of 2021. If the issues I have highlighted above are addressed, the economy may exit the recession in the 2nd quarter of 2021.

Realnews: Nigeria appears to be a puzzle. Over the years, manufacturers have been complaining of poor capacity utilization due to poor electricity among other challenges. Why is the country still experiencing the same problem it had more than 28 years ago?

Ekpo: It is a puzzle. The country has all what it takes to have constant power supply. Even 18 hours power supply would go a long way in solving some of the problems in the economy. Constant power supply would enable firms to operate perhaps two shifts and employ more people, among other benefits. For now, epileptic power supply increases the cost of doing business, hence FDI and new domestic investment are not attracted into the country. We have a generator driven economy and no country develops with generators.

After 30 years or more, the generator business is still thriving in the country.

Realnews: Why is it impossible to have constant power supply in the country despite the privatization of PHCN?

Ekpo: The amount of resources sunk into the power sector is alarming, disturbing and embarrassing. We unbundled NEPA into PHCN yet no positive outcome. The 5000 or so megawatts generated and distributed by NEPA was distributed to so-called private investors (Gencos, Discos etc) yet no improvement. The private companies put together have not added much to the national grid. Research has shown that a 1 percent increase in power supply would grow the GDP by 3 percent. What needs to be done is to look for global players in the energy sector (I think government started doing that) and engage them with a view to ensuring power supply to the country at some date. The players would have the expertise, resources and credibility. For now, there are persons making money from the epileptic power supply based on the generator business.

Realnews: With the constant epileptic power supply in the country, is it justifiable that electricity tariff should continue to increase like the government did recently?

Ekpo: It is not justifiable especially in this period of economic hardship to households and their families as well as businesses struggling to survive. For me, any increase at this time should be borne by government, if necessary. Theoretically and in practice the power sector is often a monopoly. If not regulated by government, would charge very high price to consumers. At present the manner the power sector is regulated creates further distortion.

Government including sub-national governments cannot run away from participating in the electricity business in order to ensure that there is appropriate pricing of electricity in the country.

Realnews: If the electricity sector is actually privatized, why does the government always wade in to reverse power tariff anytime there is an increase?

Ekpo: That is the point I am making. Privatization is not the answer. We have seen the outcome. A government that is strategic would regulate the sector and/or encourage states to come together and participate in the power sector; own substantial equity; sell some to citizens and commercialize the management. There are climes we can learn from.

Realnews: Nigeria has a negative growth of -3.62 percent, high inflation of 15.7 percent and in January 2021, it is expected to be at 16.1 percent. What can the economic managers do to return the country to single digit inflation?

Ekpo: Theoretically, single digit inflation rate is ideal. Inflation hurts the poor more than the rich because the latter can draw from savings to meet his consumption pattern. There are economies with double-digit inflation and are doing well. The issue is to determine the economy’s benchmark. When an economy is performing well, monetary policy via mopping can tamper the inflation rate. Remember that inflation is a price and if it is too low (deflation) producers may be discouraged to provide goods and services. There is no question that moderate inflation is preferred. For Nigeria, the inflation rate is mainly cost-push, hence if the structural rigidities are removed, the rates may tend downwards. The cost of doing business is high (power supply), uncertainty in the forex market; ad hoc government policies, persistent fiscal deficits, rising debt, among others, would raise the inflation rate.

Realnews: Some school of thoughts are optimistic that in 2021 Nigeria is going to be different because we are going from economic disruption to eruption. Do you share this belief? If so or not why? How will the eruption happen?

Ekpo: It is always good to be optimistic about developments in our country. I do not share the view that Nigeria would be different in 2021. However, if there is a political will then the elements required for a new Nigeria can be put in place. For example, the power situation – will it be addressed. Will programmes directed at the poor be implemented and monitored?

Assuming Nigeria would be eruptive, in whose interests? Even in the present Nigeria, there are persons still making billions of Naira through state capture. The extent of primitive capitalist accumulation of a special type is unprecedented in our history. Go to the airports and see the number of private jets in a country where poverty is endemic, and inequality continues to widen and millions of Nigerians lack the basic needs of life.

Realnews: Do you foresee the adoption of exchange rate flexibility policy or floating of the Naira this year? How will this affect the foreign reserve of the country?

Ekpo: Given the structure of the Nigerian economy, market forces cannot determine the exchange rate. The domestic currency, Naira, is not a convertible currency hence our foreign reserves must be managed. A managed float is the appropriate regime. The foreign currencies, whether US dollar, Pound Sterling etc is not yours so even when you think you have enough, it is provisional. Any negative shock in the oil market would affect the reserves. When the economy is properly diversified in terms of revenue sources, that is, earning foreign exchange away from oil and is producing goods and services for export then the value of the Naira vis-à-vis other currencies can be ‘determined’. This preoccupation with market forces is sickening. If one considers the assumptions underlying market forces, it is one of the available benchmarks for determining prices. Where the market works, fine, but where it does not use it as an instrument. However, managed float regime must be implemented on the premise of watching the movement of macroeconomic fundamentals.

There are so many powerful forces outside the market. In some instances, the market has to be created.

Realnews: How do you see the closure of Nigeria’s borders? What was it supposed to achieve? Was that objective achieved and how?

Ekpo: Government in its wisdom decided to close the borders to ensure that Nigerians patronize made in Nigeria goods, particularly agricultural products like rice and prevent smuggling as well as the re-entry of re-exported goods. The closure led to smuggling due to inadequate supply, food prices skyrocketed. Our borders are quite porous. The objective was not achieved because it was not part of an overall strategy. Remember that Nigeria is part of the ECOWAS protocol ensuring free movement of goods and services. The borders have been opened and I hope the Customs would do their work.

Realnews: Do you find it shameful, that more than 50 years after Nigeria started oil exploration and exploitation, it does not have any functional refinery. None of the four refineries in the country is working at optimal capacity despite all the money budgeted for turnaround maintenance, TAM, over the years.

Ekpo: It is very shameful that after 50 years, we are still exporting crude oil to import refined products. The refineries should be commercialized and shares sold to Nigerians through public offer with a limit on the number of shares an individual can purchase. In the 1980s, the refineries were working. The system needs total overhauling.

Realnews: With the current situation of things in the oil and gas sector, would you say that the downstream sector has been deregulated? And Why?

Ekpo: Government says it has been deregulated, but the NNPC has the monopoly to import refined products. Hence, I do not understand what is meant by deregulation. To deregulate implies that persons or firms are free to enter and exit the business. The PPPRA is still in existence with other subsidiaries of the NNPC. Perhaps, it is a regulated monopoly!

Realnews: If the downstream sector has been deregulated, should the government still be funding the bridging of petroleum products to the North? Is this practice sustainable and why?

Ekpo: That is why I said that the kind of deregulation is strange to me. Government should not be funding the bridging of petroleum products to the North. If there is deregulation then government can purchase at the appropriate price and send the product to anywhere in the country.

Realnews: For more than 16 years, Nigeria has failed to pass the Petroleum Industry Bill? Why and how is this affecting investments in the sector?

Ekpo: I hope the present assembly would pass the bill. It has taken too long. It would not solve all the problems, but it would address some of the challenges. There would always be investors in the crude oil sector because of the high returns no matter the security challenges.

The last time I checked, the bill addresses some of the concerns of the oil producing communities, especially in the areas of capacity building and socio-economic development.

Realnews: Why the hoopla over government’s bid to fund budget 2021 deficit by borrowing money from unclaimed dividends and dormant accounts?

Ekpo: The government needs resources to finance the 2021 budget and other developmental projects. Whoever advised government to borrow from dormant accounts and unclaimed dividends must have a rethink for want of a better word. It would have been meaningful in this period of recession to advise households to claim their dividends and spend the money in buying goods and services to enhance aggregate demand. Banks should call on customers with dormant accounts to reactivate same. There would be a plethora of court cases if the policy is implemented. For individuals who are dead, there are mechanisms for retrieving unclaimed dividends by relations etc. When I saw it in the Finance 2020 Act, it was puzzling. I would advise government to source for other ways of raising resources and they have been doing that and expunge the unclaimed dividend and dormant account ways of raising money by amending the Act.

Realnews: What is the problem with this policy and what other alternatives should government turn to?

Ekpo: Why are we always looking solely at the revenue side? What about expenditures? Let us reduce the cost of governance, reduce wastages and do expenditure switching. There are federal government assets and abandoned projects scattered all over the country – why not sell them to raise revenue. Bring more people into the tax net and tax the rich heavily to pay for their conspicuous consumption. The return on savings is just too low hence the inconsistency between savings and investment. The national savings/GDP is too low. What of issuing diaspora bonds?

Realnews: How do you see the overall management of the economy? What can be done to improve it?

Ekpo: The managers are doing their best, but one of the problems is the lag structure. The inherent delays in the conduct of government business such as recognition lag, administrative lag and operations lag). In addition, there is need to infuse experts in running crucial agencies of government. However, citizens seem to have lost trust and confidence in government and the ability to regain such would be helpful. Managing an economy is not a tea party. It is a 24/7 affairs. Another matter is the incentive structure in the public and civil service; workers are not properly incentivized, hence the tendency for corrupt practices and rent seeking behaviour. To manage an economy effectively and efficiently, a qualitative civil service is required.

Realnews: Nigerians are still skeptical about the deadliness of coronavirus, COVID-pandemic. Why?

Ekpo: About the coronavirus pandemic, it is important to raise public awareness.

Government at all levels should wage campaign like political rallies to educate the people; in the villages use town criers and the existing social capital to drive home the message.

Furthermore, it is important to enforce existing protocols.

Realnews: Can you give an estimate what the coronavirus has caused the Nigerian economy?

Ekpo: It is difficult without any rigorous empirical work. But one can guess that the economy has lost billions of Naira taking the economy far away from its optimum output.

Realnews: How best can the government sensitise the public about COVID-19 and convince them to take the vaccine?

Ekpo: Once the vaccine is made available, the President, his cabinet and other senior officials should take the vaccine to demonstrate the safety. The same should be repeated at the state and local government levels. This would instil confidence in most people to take the vaccine.

Realnews: Is COVID-19 more dangerous that other killer diseases like malaria and Cholera which has claimed more lives in the country. Why is big attention being given to this pandemic?

Ekpo: They are all deadly. I wish experts would discover a vaccine for malaria which claims the lives of millions of Africans every year.

Realnews: Will the advent of President Joe Biden have any positive impact in Nigeria and Africa in general?

Ekpo: There would be a marginal impact. He would reverse some of the obnoxious policies of Donald Trump against Nigeria and Africa. President Biden has the experience and empathy to engage Nigerian officials in meaningful discussion for a better relationship.

President Biden would see Africans as human beings, but except for Trump, America’s foreign policy does not change much regardless of the political party in power.

Realnews: Now that the leadership of US is settled, should it not go ahead and support the candidacy of Ngozi Okonjo-Iweala as the director general of the World Trade Organisation? Why?

Ekpo: Why not. President Biden should without delay support the candidacy of Dr. Ngozi Okonjo-Iwaela as the Director General of WTO. She is very qualified.

Realnews: Do you agree with the position of the US that Okonjo-Iweala is not well versed in trade matters, but in development? What’s the difference between trade matters and development and why should it matter given her robust experience in economic and finance?

Ekpo: She has the experience. She has dealt with trade matters. As an Economist you cannot be an expert in development without dealing with trade, that is, the external sector.

Realnews: How best can the country ensure that Okonjo-Iweala’s bid for the WTO DG ends successfully?

Ekpo: Nigeria should lobby President Biden and open discussions with China, including Britain. Nigeria should contact influential American to talk to President Biden. Lobbying former President Obama may not be a bad idea.

Realnews: Is there any other information you would like to give regarding the future of the country’s economy?

Ekpo: For Nigeria to fast-track development, she must imbibe Developmental State Economic Philosophy within the context of market socialism, which is not at variance with democracy. The state must perceive development as a priority and therefore be qualitatively and strategically involved in the economy. The private sector is one of the agents of growth, but not development. Economic growth is not development neither is it modernization. It is the state that would ensure fairness and equity. It is the state which would provide incentives and direct the private sector. We want a future Nigeria that would ensure opportunities for all and not miss the 4th industrial revolution.

 

– Feb. 4, 2021 @ 11:05 GMT |

Tags: Exclusive Interview with Prof. Ekpo